DR. BENJAMIN E. DIOKNO

 

DR. Benjamin E. Diokno is the recent Governor of the Bangko Sentral ng Pilipinas (BSP). He graduated with a Bachelor's degree in Public Administration from the University of the Philippines (1968) and a Master's degree in Public Administration (1970) and Economics (1974) from the same university.

He served as a financial adviser to the Senate of the Philippines. He has served as a consultant and advisor to various economies such as the Philippines, China, and the World Bank, Asian Development Bank, European Commission, and USAID.

He has also attended numerous international conferences organized by the IMF, ADB, World Bank, APEC, and other international organizations. In addition, he authored numerous publications and articles on his research interests. Which have been published in scientific journals and policy reports. He is Professor Emeritus of the University of the Philippines. For more than 40 years, he has taught the following courses: Public Sector Economics, Microeconomics, Macroeconomics, Development Economics, and many more.

MR. Benjamin E. Diokno, Governor of Bangko Central NPPP (BSP, Central Bank of the Philippines), on April 22, 2020, Tuesday at the call of an investor with Standard Chartered Bank, Manila.

Good day everyone, Thank you for the opportunity to share the central bank's views on the economic growth and prospects of the Philippine economy among all current epidemics.

Bangko Sentral ng Pilipinas  (BSP) said on Tuesday that it has tentatively predicted that the country's economic growth this year will be between 1 and 0, Coronavirus disease 2019 (COVID). The latest additions to the forecasts of financial institutions and rating agencies. (COVID -19) Infectious diseases.

As Finance Secretary Dominguez rightly explained, the Philippines was on a positive rating even before the global health crisis began. Its soundtrack record of prudent policy-making has led to a strong external balance sheet, healthy public finances, and positive economic performance in recent years. The country's strong fundamentals have provided some flexibility during the current epidemic.

The Development Budget Coordination Committee estimates that real GDP growth in 2020 will be suitable or more suitable, which will have a negative impact on the supply and demand aspects of the economy. However, once safety measures are in place and a full recovery is expected in 2021, domestic activities are expected to resume.

The expansion of community stabilization measures by April 30 will have a negative impact on domestic economic activity. Similarly, slower global growth, tourism, foreign investment, trade, and remittances from the Philippine (off) remittances are expected to further hamper the country's growth.

The BSP has discussed an aggressive monetary policy to tackle the negative spread of epidemics. With the management's inflationary environment and stable inflation expectations, the Monetary Board sees a substantial reduction in policy rates to boost the country's growth and momentum during strong policies. The easing of monetary policy is aimed at ensuring adequate domestic liquidity and credit in the financial system, as well as reducing borrowing costs for affected firms and households.

                              Following the implementation of liquidity reservation measures by the BSP, domestic liquidity has improved in recent weeks, with BTR's latest T-Bill and T-Bond auction taking place on April 13 and 14, respectively, as well as on the 15th. ۔ Term Submission Facility (TDF) auction in April. At the same time, the influx of funds has led to a decline in the average interest rate (WAIR) in the interbank market. Furthermore, the purchase of GS by BSP in the secondary market helped in improving the activity of the GS market. To date, BSP has purchased GS worth a total of P62B from the secondary market.

The BSP is ready to use the full range of its financial instruments and deploy monetary policy and regulatory support measures to meet it is cost and financial stability objectives.

The Monetary Board has already approved temporary regulatory and re-assistance measures for BSP-supervised financial institutions (BSFIs). (MB Resolution No. 397 dated 13 March 2020).

The BSP acknowledges that the spread of COVID-19 may affect the operations of BSFIs in relation to lenders and /or industries or businesses or businesses or enterprises or risks severely affected by COVID-19. Possibly significant effect. Measures are taken to increase health and safety risks to BSFI employees and customers due to the spread of the virus, such as lockdown situations, local work suspensions.

In addition, the BSP has implemented exceptional tolerance measures to complement the national government's broad-based health and financial programs, including mitigating the effects of COVID-19. The measures include a ₱300 billion repurchase agreement with BTR, as well as the launch of a package of measures to help lend to micro, small and medium-sized enterprises. Loans to MSMEs will be treated as part of compliance with the reserve requirements of banks.

At the same time, the BSP is monitoring developments in epidemics. In examining its monetary policy settings, the BSP will continue to rely on data, which includes data on the inflation horizon on the policy horizon and the risks surrounding such a perspective, as well as demand conditions. It will also guide you through the review of statistics.

The BSP, through its financial resources and regulatory support measures, has responded swiftly and decisively to reduce the economic and financial damage caused by the COVID-19 epidemic. Furthermore, the evidence suggests that BSP's liquidity measures have improved the liquidity of the system in recent weeks and stabilized the broader financial position.

However, the risks posed by the growth outlook are turning negative and, for now, a U-shaped recovery is expected. The challenge, therefore, is to provide the economy with a viable combination of financial responsibility and financial measures.

Reassuringly, there are economic policy measures in place to address the risks associated with the epidemic. Accordingly, BSP will continue to work with market participants and relevant government agencies to ensure that its policy responses are timely and appropriate, especially during these difficult times.

Economists say monetary policy tools are like medical devices that provide stable conditions for the patient, while financial measures are the medicine that hastens recovery. In an economic crisis, fiscal and monetary measures need to be accelerated, targeted, and completed.